Skip to main content

About this Show

Closing Bell With Maria Bartiromo

News/Business. Maria Bartiromo. Analysis of the day's winners and losers in the stock market. New.

NETWORK

DURATION
01:00:00

RATING

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Virtual Ch. 58 (CNBC)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
528

PIXEL HEIGHT
480

TOPIC FREQUENCY

Us 17, Steve 10, Larry Ellison 10, Hp 8, Malibu 5, Ellison 5, Ken Feinberg 4, America 4, Dan 4, Schwab 4, Jerry Sandusky 3, Lakers 3, China 3, Apple 3, Bob 3, San Francisco 3, Damon 2, Einhorn 2, U.s. 2, Oracle 2,
Borrow a DVD
of this show
  CNBC    Closing Bell With Maria Bartiromo    News/Business. Maria Bartiromo. Analysis of the  
   day's winners and losers in the stock market. New.  

    October 2, 2012
    4:00 - 5:00pm EDT  

4:00pm
years inside the dow jones industrial average. stay tuned now. do not miss maria's exclusive with the oracle chairman and ceo larry ellison coming up. i'll see you tomorrow. and it is 4:00 on wall street. 1:00 p.m. in san francisco. do you know where your money is? hi, everybody. welcome back to the "closing bell." big reversal of fortune in the final hour of trading. i'm maria bartiromo. here's what we're following at the close. mixed market on wall street today. the dow climbing 52 points early in the trading session giving back all those gains and them some, but coming back by the close. the nasdaq closing in the green due to a big late day gain by apple. a complete reversal there as well. the dow jones industrial average closing down just about 30 points after coming back from that early day loss. what should you do? what do you make of another late-day swing? a trio of top strategists will
4:01pm
be weighing in coming up in the program. then a rare and exclusive interview for you with larry ellison. the stock has been on fire. we have so much to get with him, including if oracle is looking to do more deals. plus, his take on apple's future without his close friend steve jobs. and interview you won't want to miss. joining us coming up. meanwhile, let's look that the reversal on wall street. yes, we closed lower, but it was well off the lows of the afternoon. the dow jones industrial average down 0.25% this afternoon. a come back in apple, a handful of technology names. nasdaq finished positive, reversing its earlier losses with a gain on the session of 6 1/2. the s&p 500 also higher on the session. there's a look at treasuries here with yields fractionally higher on the day. as you can see there, yields moving lower and the price moving higher, pardon me. let's get straight to the markets and talk about investing in this environment.
4:02pm
gentlemen, good see you. thank you so much for joining us. dan, let me kick this off with you. what do you think happened at end of the day today? seems this market has been trading on some worries last several sessions. yet, we did see some optimism at end of the day. >> absolutely. it's a case of perhaps, you know, still do not fight the fed. what we were watching specifically was apple. you mentioned it. we were looking for support on the stock at around 650. wouldn't you know it, it hit their intraday lows. they don't want to see that stock drop. the interesting thing with that is, you know, apple is a bell weather that's really driving the nasdaq 100, driving a lot of these larger cap benchmarks we follow. if you keep that buoyed, you're going to keep the markets buoyed going forward. >> that's a really good point. i guess, david, for those fund
4:03pm
managers who have not owned apple, they're going to be playing catch up fourth quarter so their fund looks better by year end, right? >> it's possible. you have a lot of people that are underinvested and have been out of the market for a good period of time. this is going to be a really tough year. it might be easy to catch up. more than likely, very difficult to catch up. >> so what do you do then in this environment? >> i think you got to go with the laggards. you have to do things that are going to be related to the fact you have central banks all over the world printing money. you've got to be out of bonds. they want assets up. you can't fight that. >> even though, david, the earnings are going to see a contraction in the third quarter, should we be looking ahead to the fourth quarter where we're expecting a bounce back in terms of the earnings picture? or do you think the negativity that we're going to see in the third quarter, s&p, capital iq
4:04pm
expecting a contraction s that not priced into the market? where are we in terms of evaluation versus fundamentals? >> a lot of preannouncements coming out with increased negative outlook on earnings. i think the underlying theme here is the fed and really central banks around the world. they're sending a very clear message to move to risk assets, and to not do that, you know, you don't do that at your own peril. earnings, you know, we're going to see earnings contract. there are other aspects of this wall of worry that the market continues to climb. under all that is this easy money policy. we're not going to fight the fed. >> rick santelli, how do you see it? we were expecting money moving into finxed income. you didn't really get that today. >> no, maria. the last five sessions we've closed in a five-basis point range. i'm talking between 161 and 165. what i find fascinating is in
4:05pm
the last 24 hours i've heard three stories that talk about how major institutions, mutual funds, their asset complexion has definitely skewed more towards the fixed income, bonds and money market. even though our guests say, that's it, we don't want anymore fixed income, the money is still there. it's overwhelming. so who out there is bucking this trend? you know, there's got to be somebody out there with all these trillions of dollars that are in money markets and bond funds. >> yeah, and they're not getting any return. what do you think about, dan? >> well, you know, depending on where you look specifically in fixed income, i mean, within the treasury markets you have the federal reserve buying alie ini share of new issuance.
4:06pm
i don't necessarily like what's going on here. it's a little fishy. there's some major divergences, even in the equity markets. you look at dow transports versus the dow industrials. transports nowhere near their recovery highs for the cyclical bull market. what that tells us is that the market breadth in equities is very shallow. it's very pointed. that could be a danger sign or warning sign ahead. so, you know, despite the don't fight the fed zombie-like montra, we would be very careful in this market, and we think we're headed most likely for maybe an air pocket correction 3 to 5% in the upcoming weeks. >> yeah, but -- >> so you want to sell into strength, dan? >> i'm sorry? >> you want to sell into any strength then, dan? >> well, i think we want to trim positions here and perhaps look for a better entry point. complacency has run amok.
4:07pm
sentiment has gotten very bullish. like we said, momentum just isn't there. it's slowing down. we're not necessarily looking for a new bear market, per se. but the market, you know, here is frothy. we would actually, yeah, look to take some profits, maybe scale back for the near term in equities, look for a better equity point. >> that's the trade, but for investors -- >> yeah. >> for investors, that's the trade. for longer term investors, cash and treasuries are dead money for a long time to come. that's what charlie evans basically told us yesterday. that's the message. you need to be looking for those high yield, high growth areas. >> mathematics of bonds just aren't there. >> we're at a search for yield. we're in a search for yield. gentlemen, thank you very much. talk with you soon. we appreciate your time tonight. we'll see you, guys. the federal reserve may have fueled a third quarter rally for sure, but the central bank's easing did have some unintended
4:08pm
consequences. >> maria, while the market rallies, capital markets activities still lagged for much of the third quarter, according to final numbers. global m&a activity down. while that might not seem like a huge slide, it is when you know it was bolstered by aig's jumbo $20 billion secondary stock sale in august that comprised a third of the year's activity. the number of ipos is also down. cut more than in half from the same period last year. what the fed has done is juiced the high yield market, driving a record buying spree for junk bond at yields normally reserved for higher credit companies. in september, a home builder, d.r. horton, sold $325 million of bonds at the lowest ever yield for a ten-year junk bond.
4:09pm
even those record levels of junk bonds not seen since 1980, mar e maria, still not enough to make money for the bank. investment banking fees the lowest since the posdrought. >> really striking. thank you so much. we have breaking news now from phil. >> we've been talking all day about stronger than expected auto sales. now we know how strong. auto data has calculated that the september sales rate was 14.96 million vehicles. that is the strongest since early '08 for one month and the strongest third quarter since the third quarter of 2007. again, 14.96 for the month of september. maria. >> all right. thanks so much, phil. we're live at the oracle open world conference today in san francisco. keep it right here. you won't want to miss one beat of what's headed your way in
4:10pm
this special edition of the "closing bell." coming up on the "closing bell," the man behind the mask. many call him the inspiration for marvel's "iron man." billionaire, philanthropist, genius, and thrill seeker larry ellison sits down exclusively with maria to talk about what's next for oracle and what his next grand adventure might be. plus, making things right. from 9/11 victims to those who suffered at the hands of convicted sex offender jerry sandusky, ken feinberg tells maria about the difficult job ahead compensating those affected by the scandal at penn state. that's ahead on the "closing bell." i'm bara ck o bama and i approve i'm bara this message.
4:11pm
ck o romney: "it's time to stand up to the cheaters" vo: tough on china? not mitt romney. when a flood of chinese tires threatened a thousand american jobs... it was president obama who stood up to china and protected american workers. mitt romney attacked obama's decision... said standing up to china was "bad for the nation and our workers." how can mitt romney take on the cheaters... when he's taking their side? zagat just gave hertz its top rating in 15 categories, including best overall car rental. so elevate your next car rental experience with the best. it's just another way you'll be traveling at the speed of hertz.
4:12pm
4:13pm
welcome back. it's not hard to tell when hedge fund manager david einhorn told investors today that he thinks chipotle's stock is short. my next guest couldn't disagree more with the short call. he's damon vickers. good to have you on the program, damon. thanks for joining us.
4:14pm
why do you think you're right? >> well, yeah, you named it. look, i think we own chipotle. we also own yum brands. his assertions, one by one, seem kind of an empty bag. they don't really hold much water. >> so let's talk about some of those assertions, damon. einhorn is citing competition from taco bell as part of his reason for recommending the short of chipotle. you don't think this is a concern. >> i don't. taco bell is good at cheap fast food. they're not good at fresh mex. chipotle mexican grill was founded by steve ellis, culinary institute of america. glen bell was founded -- taco bell was founded by glen bell, a telephone repairman. it's a difficult culture.
4:15pm
chipotle is quality. they have good, fresh ingredients. taco bell cantina of which, by the way, i have a cantina bowl as we speak. this food is lifeless. the rice is overcooked. they make it on the same assembly line as their other products. it's just not a very good product. the price point, this is about $5. you know, given paying $5 for the cantina bowl versus $6 for something that's frersh, no antibiotics, i think i'm going to pick chipotle every time. >> good point. this was such a hot stock when it went public. look what's happened to this company. einhorn is also highlighting the rising expenses, the company's inability to pass those costs on. is that a real squeeze on margins? what about that? >> i don't think so. look, in terms of passing on costs, every retail in america has to deal with the fact of passing on prices. it's not unique.
4:16pm
it's not also something not unique to taco bell as well. margi margins-wise, i think they're doing fine. i think as people go through it and sample the menu, they see the difference between taco bell and chipotle. they're going to choose chipotle. taco bell will never be fresh mex. the food to taco bell is delivered off of corporate trucks. chipotle mexican grill is sourced locally. no antibiotics in the meats. better corporate culture. in terms of the stock price, no stock price, not the market, you know, maria, nothing moves in a straight line. we increased one of our positions by 50% today in chipotle right on his comments. david's a nice guy. i hope it works out well, but he may lose a lot of money on this call. >> all right. we'll be watching. we're happy you're here to provide the other side. that's what makes a market. damon, see you soon. good to see you. >> you too. up next, he's one of the
4:17pm
richest men on the planet from the business he built from nothing. larry ellison sits down with me for an interview you'll only see on this network. we'll talk about oracle and a lot more right here on the "closing bell." up next, the lawyer who headed up compensation for victims of 9/11 and the bp oil spill. now he's been hired by penn state to determine who gets how much in the horrific jerry sandusky scandal. ken feinberg on the delicate business of doling out financial justice to victims. stay with us. [ male announcer ] the freedom and spirit of malibu is an awesome place to be. introducing the all-new 2013 chevrolet malibu eco. ♪ sophisticated new styling, the fuel-saving intelligence of eassist, 37 mpg highway, and up to 580 highway miles on a single tank of gas. ♪ the all-new 2013 chevrolet malibu eco. ♪ it has everything to put you in the malibu state of mind no matter what state you live in. ♪
4:18pm
when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this.
4:19pm
and those well grounded. for what's around this corner... and the next. there's cash flow options from pnc. solutions to help businesses like yours accelerate receivables, manage payments, and help ensure access to credit. because we know how important cash flow is to reaching your goals. pnc bank. for the achiever in you.
4:20pm
welcome back from san francisco today. the lawyer who ran the september 11th victims fund and other major compensation efforts has now been tapped to oversee two other high-profile cases. hen state hired ken feinberg to settle personal injury claims by men who claimed they were sexually abused by former coach jerry sandusky. he's helping oversee the funds for the victims of the aurora theater shooting. for someone who's been in this unusual line of work since the 1980s, how do you assign a dollar amount to such unbelievable suffering? joining me now is the man himself, mr. feinberg. ken, good to have you on the program. >> glad to be here again. >> this is such a horrific story. let's talk first about the penn state victims' claims. it is so terrible and shattered so many lives. can you remain unemotional when looking at each case? >> no. unless you have a heart of
4:21pm
stone, i don't anybody could remain unemotional. but you're given an assignment. you try and be as professional and as objective as you can. then the penn state situation, i'm really a facilitator working with the lawyers for penn state and the victims to try and reach an accommodation. it's much different from aurora or from bp or 9/11. this is an old-fashioned negotiation in an effort to reach a settlement. >> so it's still unclear where this money is going to come from. i mean, penn state says settlements will be paid by the school's insurer. the insurer is contesting this. so do you know for sure that there is money available? >> yes. penn state has made it very clear to me that whether it's the insurer, whether it's penn state through other funds, not to delay, let's move forward quickly, let's try and facilitate a settlement between
4:22pm
10 and 15 known cases and get this done by the end of the year. >> is penn state paying your firm for the outside -- for this outside of the money set aside for the victims? >> you'll have to ask penn state how they're paying the firm. i'm sure it's from funds outside of any funds available for victims, yes. penn state would have the answer to that, not me. >> how do you decide who gets what? it's just -- it's so mind boggling. how do you go through the process of deciding this? >> well wit, you sit down with lawyers and ask them. we do know, maria, what these cases are worth when the archdiocese of various church districts settle cases. we have information on settlements and verdicts around the country. it's a starting point. how much those vary and what other factors you bring into account, statutes of limitation, legal defenses, nature of the
4:23pm
injury, the damage suffered, all of that has to go into the negotiation process. >> so you're also overseeing the aurora victim relief fund. you say it's unusual for a fund to exist at all. why do you say that? >> how many bad things happen to good people every day in this country? you don't have aurora funds or virginia tech funds or 9/11 funds. this is a singular example of private donations coming into the aurora community. the governor of colorado, governor hickenlooper made it clear. he wanted me to get this money out fast without restrictions. i'll be out in aurora next week to listen to the victims, hear what they have to say, meet with the governor, and hopefully quickly come up with a compensation proek ree yum to distribute what is a small amount of money, relatively speaking. >> all right. we'll leave it there. ken, thanks so much for your
4:24pm
time today. we appreciate it. best of luck with these cases. see you soon. >> thanks again, maria. >> ken feinberg joining us. up next, it's the interview we've been waiting for. larry ellison will sit down with me for a cnbc exclusive. it's live. stay with us. well, if it isn't mr. margin. mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know.
4:25pm
4:26pm
4:27pm
welcome back. he may personify the american success story. oracle ceo larry ellison is a billionaire many times over, but he defied the odds to get there. born in the bronx, new york, larry ellison's life is a great american story. now among the richest people in the entire world, his unmarried teenage mother forced to give him up as a baby to an aunt in chicago, where he was raised in a modest apartment. as a boy, he always showed strong abilities in math and science. he was even the science student of the year at the university of illinois. but after his adoptive mother
4:28pm
passed away, ellis oon dropped t of school and headed to california with little money in his pocket. his skills were quickly recognized. he helped build the first ibm compatible mainframe system. in 1977, he and two of his colleagues broke off and started a company that would eventually become oracle. ellison took the company public in 1986, already a billion-dollar enterprise. now a $100 billion company, his mystique has grown as a billionaire who lives on the edge. he's made shareholders nervous while suffering body blows from mountain biking and surfing. he won a yacht race in sidney overcoming hurricane-strength winds that sank five competitors and drowned six participants. some have speculated he's the inspiration for the tony stark character in "the iron man" films, with ellison even making
4:29pm
a cameo in the most recent sequel. ellison's passion for boating it now focused on the america's cup competition. >> this sis extreme sailing. >> he's the principle supporter of the oracle bmw racing team, which won in 2010, besting the field by more than five minutes. in a less dangerous side, he signed the gates-buffett giving pledge, giving $450 million to the ellison medical foundation, which searches for cures for diseases more common in people above the age of 60. joining me now is oracle ceo larry ellison. great to have you on the program. >> hi, maria. >> thank you so much for joining us. here we are at open world. we spoke to mark herd yesterday. i'll try not to overlap. tell me where oracle is going and what you're announcing here at open world. a lot of talk about the cloud. why do the cloud now? >> i think there are three tiers to the cloud. back in 1998, the first modern
4:30pm
cloud company net suite was started. the cloud's been around for a while. >> you own 45% of it. >> i do. my family and i own the majority of that company. i started that company with evan goldberg back in 1998. very proud of that. mark started salesforce.com in 1999. the modern cloud began back in the late '90s. you know, oracle was a well-established software company at the time. gradually, we have been moving our applications or rewriting our applications for the cloud. we completed a seven-year rewrite of all of our applications, human capital management, accounting, you know, finance, customer relationship management. we completed that last year and announced fusion applications for the cloud. we also provide our database in the cloud. the number one database in the world. the most popular programming language in the world, java, is
4:31pm
from oracle. that's in the cloud. fusion middleware is in the cloud. then we announced a whole bunch of advanced technology hardware designed for the cloud called our engineering systems. >> so it's fair to say you actually had the idea about the cloud way before anybody else did with net suite. but why now? i mean, what is the advantage for an enterprise to put their information on the cloud? some people might say, is it safe? what does that mean? >> it means that the computer industry is kind of coming of age, adopting utility model of computing. all other networks have utility model. in other words, electricity power generation, the complexity of generating power and distributing power is hidden from the consumer of the power. consumers just plug into the electric network. they don't worry about whether it's generated by coal or solar or wind or how the energy is created. they ignore that.
4:32pm
that's handled by the electric service provider. they don't have to make huge investments in creating more electricity. it's all done as a service. computing is now being offered for the first time, if you will, over the last few years as a service in the cloud. it means the consumers don't have to get bogged down with the complexity of computing. they don't have to make a huge capital investment. they just plug n run their applications. >> tell me about the world today. there's a concern that things are slowing, not just at oracle, but throughout business because of the global slowdown. that's what we saw in the latest earnings release that you reported. and there's a change in terms of data. data has changed. and you've got to keep up with this changing data coming from all sorts of mobile devices, et cete cetera. tell me about business right now around the world. what are you seeing? >> actually, our business is fairly good. i know in reported u.s. dollars, our revenue dropped slightly, a
4:33pm
couple of percent. that's really because the u.s. dollar strengthened. it was an exchange rate conversion. we do a lot of business in europe. when we converted those euro into dollars this year, we got a lot fewer dollars than we did the previous year. when you compare the two years, we actually grew our revenue, but not in terms of dollars. in terms of euros, they went up. once we converted into dollars, they went down. our business is actually fairly good. our software business is growing. our -- the part of our hardware business we care about the most, the engineered systems, are growing at over a 100% rate. >> you've been a serial acquirer. the growth has shown through all the deals you have done. where are the holes, where are the opportunities to grow? are you poised to do another deal soon? >> we're not planning any major acquisitions right now. we're really focused on the fact that over the last seven or eight years we've re-engineered all of our applications for the cloud.
4:34pm
we think that's a huge opportunity for organic growth. we made a number of acquisitions, as you point out, including sun microsystems. sun microsystems has enabled us to take their hardware engineering team and combine it with our software engineering team and develop these engineered systems where the hardware and software is engineered together. these systems deliver much greater performance as a much lower cost than conventional computers. we think we have all the assets in house to grow very rapidly on an organic basis. >> a lot of people wonder if you're interested in network apli appliances. is this something you're interested in? >> they're a good company, but right now we're not focused on any large acquisitions. we think the organic growth opportunities for us within the cloud and engineered systems are enormo enormous. >> what do you say to the critics who say, when you strip out the acquisitions, growth is not what it appears at first
4:35pm
glance? >> let's look where we've done innovation, engineered systems. we took our database and sun hardware, and we made a bunch of changes to both. on the hardware side, using networking. using a lot of flash memory. we've re-engineered our data base to be an in-memory system. we just announced exadata, version x-3, which runs all of your database in memory, delivering performance 10, times 100 times faster. that's a combination of assets we acquired and assets we've had for a very long time. the sun hardware and the oracle database software combined in a new generation of systems that we think revolutionize server computing. >> this solution is really a top to bottom solution at oracle. yet, this is something i asked mark herd yesterday. you've got these smaller companies, these upstarts trying to take some market share, particularly as it relates to the big data, the other data. so how are you going to ensure
4:36pm
that enterprises throughout are looking at oracle for that top to bottom solution as opposed to doing some business with you for the traditional data and other business elsewhere like a sales force, like smaller, nonpublicly traded companies? >> there are a lot of niche companies. we have a much more complete suite of applications in the cloud. we don't just do sales automation or marketing automation. we also do accounting and financial planning and human capital management and talent management. all of those things. so we have a complete suite of applications in the cloud. that's something a small company can't do. that's a lot of work. but underlying that complete suite of cloud applications, we have the world's number one platform. you know, the cloud is divided up into three pieces. sas, the applications, pass, the underlying software platform, and infrastructure, the underlying hardware system.
4:37pm
oracle participates in all three layers of the cloud. that's what customers want. when they buy a cloud, they get applications, they get a platform, a database, middleware, platform and the underlying infrastructure, the operating system, virtual machine, and hardware. oracle is the only company in the world that innovates at all three levels or develops, engineers, and invests in all three levels. we think it's very difficult for a niche provider to compete with us. >> we're going to take a short break, but i'm glad you mentioned sun microsystems. a lot of people are wondering when we're going to see growth there. we'll take a break, i'll ask you about that, and about the balance sheets. stay with us. more with larry ellison coming up in this exclusive on the "closing bell" ppz. [ male announcer ] you are a business pro. monarch of marketing analysis. with the ability to improve roi through seo
4:38pm
all by cob. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g. [ male announcer ] good choice business pro. good choice. go national. go like a pro. like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. we know you. trade commission-free for 60 days, we know you have to rise early... and work late,
4:39pm
with not enough sleep in between. how you sometimes need to get over to that exit, like, right now. and how things aren't... just about you anymore. introducing the all-new, smart-sensing... honda accord. it starts with you.
4:40pm
welcome back, coming to you from oracle open world conference. i'm here with larry ellison. we mentioned one deal that has yet to be proven according to the shareholders. it's sun microsystems. you've said this business, this hardware business is going to grow. what's been the problem with sun? >> well, we have two hardware businesses. we have a hardware business we care about. kind of our new generation of hardware and software engineered to work together. that's growing at more than
4:41pm
100%. but then we have another hardware business, kind of the old commodity x-86 business, which is taking microprocessors. that business is shrinking. so we got two things going on. we've got this old sun business of selling commodity hardware, which is disappearing, which we don't care about at all. our new business of selling engineered systems, which is more than doubling. the old business is shrinking slightly faster than the new business is growing. but those two lines will cross at end of this fiscal year, and we'll get very rapid growth because the bulk of our business will be engineered systems and this new very hot box, our spark t-4, which is also growing very, very rapidly. >> do you sell the ones not working? how do you get out of this? how big of a drag is it? how long are you giving this business? >> you can see the drag. our engineers systems doubled. our t-4 business is growing
4:42pm
double digits. so hour hot businesses, they're growing very rapidly. yet, the overall hardware business, you know, shrank in the last several quarters. so eventually the large commodity businesses become small commodity businesses and the small fast-growing engineered systems become large businesses. that's when those two lines cross. they'll cross this fiscal year. the overall hardware business will grow. it's happening exactly as we expect and as we predict. the difference is the businesses that are shrinking, we make no money. those are the commodity businesses. the engineered systems businesses, which are doubling, we make a lot of money because we add a lot of value. we have no ip. an x-86 box, the ip belongs to microsoft and intel. you know, we're just a redistributor of their technology. we don't care about that business. it can shrink to zero. we don't care. >> right. let me switch gears. i came across a lot of quotes when i was preparing for this
4:43pm
interview. one of your quotes was, we write software, we do not write checks. >> that was an old quote. >> does that mean you're not considering raising the dividend? you got all this cash on the balance sheet. you're not going to do a big deal. what are you going to use that money for? >> we could do a big deal again down the road. i'm just saying over the next couple of years, senior management down to individual programmers and sales people are focused on one thing, selling applications in the cloud, selling our platform in the cloud, and selling our infrastructure in the cloud. so we're laser-like focused on that kind of o growth and that huge organic growth opportunity for us. a couple years down the road, we could look at a big acquisition again. having a lot of cash in the bank is not a bad thing. my friend steve jobs had a lot of cash in the bank. >> i feel like what steve jobs did for the individual you've done for the enterprise. i know you were very close, and it hit you hard when he passed. >> yeah, it was almost exactly a
4:44pm
year ago when he passed away. he was my best friend for 25 years. he's just irreplaceable. irreplaceable in our industry and irreplaceable as my friend. >> do you think that apple will still have the noinnovation, th products and the pipeline going forward the way they did with steve jobs running it? >> i have great respect for that company. i have great respect for tim cook. i'll say it again, steve is irreplaceable. we've all lost something. you know, he was our edison. he was our picasso. there's no one like him. again, apple will continue to thrive, but not like when steve was around. >> what about your own legacy? i was talking to one of your shareholders and he said, look, i don't know if this is the mark show or the safra show. do you have a succession plan? >> right now the plan is for the three of us to run the company. oracle is a company of almost
4:45pm
120,000 people. we have a lot of work to do. i'm good at some things. mark is good at some things. safra is good at some things. safra runs operations. mark runs the field operations. i spend a lot of time with the engineering teams. those guys do spectacular jobs. so we have a lot of talent. we've got quality and quantity at oracle. we work pretty well together as a team. >> so you're not interested in doing a succession plan just yet? or you've got it in your head but you're in the sharing it. >> we have a lot of people that could take my place at oracle, but i hope they don't do it too soon. >> i have to tell you, i was very impressed with the way you handled the whole mark herd thing. it was a public situation when he was pushed out of hewlett. it was an embarrassing situation for him. you said the hewlett packard
4:46pm
board just made the worst personnel decision since the idiots on the apple board fired steve jobs many years ago. why were you so loyal and came to mark's defense so quickly? >> i think it was -- there were two reasons. one, mark is a friend. the other is look what mark did when he was at hp. people forget how much trouble hp was in when he took over. what a spectacular job he did over that five-year period at hp. you can look at the results. it's a little bit like looking at the apple results. you know, hp without mark herd. hp with mark herd. hp without mark herd. same thing with apple. apple with steve jobs. apple without steve jobs. apple with steve jobs. so it leadership important? i think it's really important. i think the board made a terrible mistake, turned out to be a huge disservice to hp employees. the company hp i love. everyone who's raised in silicon
4:47pm
valley thinks of hp as an icon. they deserve the best leadership, and mark was providing it. these guys aren't easy to replace. >> and you're providing it here. i don't even want to think about oracle without larry ellison. >> well, again, we have a lot of depth. now we have mark. you guys don't want mark? we'll take him. we've got mark. we've got safra. we've got, you know, thomas and john and larry too. so it's a good team. >> take a short break, larry. we're going to continue our conversation. we're going to talk about allocating capital in a different way. stay withi inus. larry ellison joining us on "closing bell" after this. tdd#: 1-800-345-2550 let's talk about low-cost investing. tdd#: 1-800-345-2550 at schwab, we're committed to offering you tdd#: 1-800-345-2550 low-cost investment options-- tdd#: 1-800-345-2550 like our exchange traded funds, or etfs tdd#: 1-800-345-2550 which now have the lowest tdd#: 1-800-345-2550 operating expenses tdd#: 1-800-345-2550 in their respective tdd#: 1-800-345-2550 lipper categories. tdd#: 1-800-345-2550 lower than spdr tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and even lower than vanguard. tdd#: 1-800-345-2550
4:48pm
tdd#: 1-800-345-2550 that means with schwab, tdd#: 1-800-345-2550 your portfolio has tdd#: 1-800-345-2550 a better chance to grow. tdd#: 1-800-345-2550 and you can trade all our etfs online, tdd#: 1-800-345-2550 commission-free, from your schwab account. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 so let's talk about saving money, tdd#: 1-800-345-2550 with schwab etfs. tdd#: 1-800-345-2550 schwab etfs now have the lowest operating expenses tdd#: 1-800-345-2550 in their respective lipper categories. tdd#: 1-800-345-2550 call 1-800-4schwab tdd#: 1-800-345-2550 or visit schwab.com tdd#: 1-800-345-2550 to open an account today. tdd#: 1-800-345-2550 funding is easy tdd#: 1-800-345-2550 with schwab mobile deposit. tdd#: 1-800-345-2550 investors should consider tdd#: 1-800-345-2550 carefully information tdd#: 1-800-345-2550 contained in the prospectus, tdd#: 1-800-345-2550 including investment objectives, tdd#: 1-800-345-2550 risks, charges, and expenses. you can obtain tdd#: 1-800-345-2550 a prospectus by visiting tdd#: 1-800-345-2550 www.schwab.com/schwabetfs. tdd#: 1-800-345-2550 please read the prospectus tdd#: 1-800-345-2550 carefully before investing. tdd#: 1-800-345-2550
4:49pm
4:50pm
i'm back with an exclusive with larry elson. you didn't answer my question about about allocating capital. so i think you will see gradualal and regular increases in the dividend but nothing dramatic. >> let me ask you about your own
4:51pm
use of allocation of capital. we know you have made tons of headlines buying an island. how many homes do you own right now? 15 or 11? >> homes that i live in? >> why do you buy the homes if you don't live in the. >> i bought a home in rhode island which i am converting into an art museum. i have the idea. my favorite museums are things like the hartford in pasadena where it is someone's home that you walk through home and garden. and you see the art in a very comfortable natural setting on a much smaller and more human scale. i'm going to start these art museums that are converted homes. and i have one for modern art and one for 19th century european art.
4:52pm
i have japanese. i own a home in japan on the temple grounds that will be a japanese art museum. so a lot of them are museums. >> it's a hobby of yours? >> when i was a kid i want today be an architect. i love building houses, remodeling houses, designing houses. we have another house in malibu that we're building that will be a botanical garden and an art museum. i love working on these projects. it's my hobby. the second thing i wanted to be was an airline pilot so i am an amateur architect and a pilot as a hobby. >> you must be a lot of fun to go shopping with. and the island, you love hawaii? >> i love hawaii and it is a very interesting project.
4:53pm
there what we are going to do is turn it into a model for sustainable enterprise. what i mean by that is -- i own the water utility and the electric utility and the electric utility is all going to be solar. we are going to convert sea water into fresh water and then have drip irrigation where we will have organic farms all over the island. hopefully we will export produce, really the best organic produce to japan and elsewhere. we are going to support the local people and help them start these businesses. we'll have electric cars. it's going to be a little, if you will, laboratory for sustainability and businesses of small scale. >> amazing, amazing.
4:54pm
all of this has people wondering are you spreading yourself too thin. recently you pledged $4.2 billion of your stock to take out a loan. why did you do that? >> actually, i don't owe $4.2 billion. it turns out that i have a line of credit where let's say if i want to buy something like the los angeles lakers i could buy the lakers. they are not for sale. >> you would like to buy them? >> sure. i would love to buy the lakers. very expensive way to get floor seats. the lakers are my favorite team though i also follow the warriors and the chicago bulls. >> so you take this line of credit. >> i have a line of credit in case i go shopping and something catches my eye. it's just a line of credit. >> so what happens now?
4:55pm
you have built this unbelievable company, 100 billion plus. you have an enormous amount of personal wealth. when you look back at your modest beginnings it is pretty extraordinary. >> it is extraordinary. steve and i used to talk about this a lot. i think both of us agreed every once and a while you think about it but 99.9% of the time you go on with the miracle of life, just being alive every day and doing your job and enjoying being alive. i really don't spend a lot of time thinking about how far i have come from the lowery side of manhattan. the internet isn't always 100% accurate. i think somebody was claiming we came from the bronx when it was the lower east side of
4:56pm
manhattan. >> so you are living this enormously interesting life. you want to compete in america's cup. you are doing racing. tell me where your heart is. i know it is at oracle and business. what is next? >> i think oracle, my top priority is my family and my second priority would be my job at oracle. all the other stuff whether it is a museum or architecture or flying airplanes or racing sail boats is a hobby. it is my pursuit of alternative stress. so i love to compete in business and all of my hobbies i am competitive, well-. >> thanks for spending the time with us. we appreciate it. the ceo of oracle. i will see you back in new york tomorrow. have a good night.
4:57pm
if we want to improve our schools... ...what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this. syou know, i've helped a lot off people save a lot of money.
4:58pm
but today...( sfx: loud noise of large metal object hitting the ground) things have been a little strange. (sfx: sound of piano smashing) roadrunner: meep meep. meep meep? (sfx: loud thud sound) what a strange place. geico®. fifteen minutes could save you fifteen percent or more on car insurance. not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪ that's my world. mike rowe here at a ford tell me fiona, who's having a big tire event?
4:59pm
your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. i'm back. sorry about that. i want to thank larry for being my guest tonight. take a look at the market today. do